4:21pm: Dire prediction for iron ore: the base metal, trading near 16-month highs, could slump by more than 50 per cent to the lowest level since 2009 as China boosts production and global supply climbs, UBS says:

Rates may tumble to $US70 a tonne in the three months ending September after trading between $US130 and $US160 through June, Sydney-based commodity analyst Tom Price says. China is the world’s biggest importer.

Iron ore has surged 75 per cent from a near three-year low in September as China’s growth rebounded from a seven-quarter slowdown.

hat may prompt an increase in Chinese output and idled mines with capacity of 100 million tons a year are set to return to the market from March, according to Macquarie. Global seaborne supplies will climb 9.1 per cent this year, Morgan Stanley estimates.

‘‘We expect a big correction in the third quarter,’’ says Price. ‘‘We see a big lift in supply.’’

Iron ore was fetching $US151.90 a tonne yesterday.

While Price joins analysts from Westpac to Deutsche Bank in predicting cheaper prices in the second half, his estimate is lower than most. Westpac senior economist Justin Smirk and Bank of America expect $US110 by yearend.

4:06pm: And here's another comment on today's sell-off, by RBS Morgans senior trader Luke McElwaine, who thinks the 5000-mark will hold (at least for a while):

A lot of it has to do with resistance on the market at the 5000 level, the market is finding a new home. We’ll test this level, it is a significant resistance level we’ve got here, we’re not going to crack it first time.

Europe has been off the agenda for a little while, we haven’t seen it on the front page of the paper in this calendar year. When you see an announcement like that it does make the market consider their position again in relation to Europe and as a result it does create nervousness and anything growth rating, or things of leverage to a market going up, have been sold out.

BHP Billiton -1.5% to close at $36.35Rio Tinto -0.9% to close at $65.57ANZ -1.1% to close at $28.16CBA - 0.4% to close at $65.47NAB -1.1% to close at $29.95Westpac -0.4% to close at $30.23Fortescue Metals -2.9% to close at $4.61Woolworths -2.2% to close at $33.94Wesfarmers -1.2% to close at $40.14Qantas -2.1% to close at $1.61

Top Three Performers:

1. OceanaGold +9.5% to close at $2.412. Emeco Holdings +6.7% to close at 72¢3. FKP Property +6.1% to close at $1.65

Worst Three Performers:

1. Transfield Services -5.9% to close at $1.822. Virgin Australia -5.8% to close at 41¢3. Karoon Gas -5% to close at $7

4:03pm: The Italian election results suggest recent reforms are now considered unlikely to continue in their current form, which caused investors to sell stocks, but the sell-off is likely to be limited, CMC Markets trader Ben Taylor says:

While many traders have been looking for reasons to take profits, the market’s inherent strength has met any pullback with swift bidding support as low interest rates continue to see cash pour in from the side line.

If the uptrend remains intact, we are likely to see previous gains added to over the next month.

3:33pm: Virgin Australia insists it cannot give an ‘‘iron-clad guarantee’’ that it will triple the size of Tiger’s Australian fleet within the next five years because of the volatile nature of the industry.

The competition regulator has indicated that one of the conditions of it approving Virgin’s bid for a controlling stake in Tiger Australia could be it living up to plans to boost the budget airline’s fleet from 11 to 35 planes by 2018.

But speaking after Virgin posted a more than halving in first-half profits, the chief executive, John Borghetti, said it would be irresponsible to give a firm commitment to boosting Tiger’s fleet to 35 planes because it operated in a ‘‘very volatile industry’’.

‘‘You can’t give an iron-clad guarantee on something like that because you just don’t know what’s around the corner,’’ he said. ‘‘No airline in the world would give a capacity commitment for five years.’’

3:09pm:Seven Group Holdings has blamed a subdued coal sector in NSW for a cautious outlook, which includes flat underlying earnings for the current half year, after reporting that net profits for the six months to December 31 increased 590 per cent to $258 million.

The strong result was largely powered by Seven’s Caterpillar franchise in NSW and Western Australia - Westrac.

‘‘The first half group result was exceptional and was driven by some significant large fleet deliveries at Westrac,’’ Seven Group’s chief executive Peter Gammell says.

‘‘The second half will not see this level of product sales and we are therefore not anticipating as good a half.’’

Mr Gammell says earnings will be flat for the current half and underlying group net profit for the 2013 financial year will be up approximately 10 to 20 per cent on 2012’s $343 million result.

2:51pm: Robert Rennie, Westpac’s chief currency strategist, says the Italian elections mark an important step in the deterioration in European politics.

‘‘The idea that Berlusconi was finished will now need to be rethought,’’ he has written in a note.

‘‘Financial markets will now have to take at face value the idea that the protest vote can actually attain an overall majority in some parts of Europe’s legislature. This is indeed a worrying development and one that should rattle financial markets for some time to come.’’

2:25pm: Shaw Stockbroking analyst Darren Vincent said the Flight Centre results were in line with expectations, adding that the slight dip in the company’s share price today was in part a reflection of the market’s nervousness about the Italian elections, and a slight inherent volatility in the stock’s value.

‘‘There are no secrets there that either Flight Centre or the travel industry has as to the way the outlook is. We’re staying bullish,’’ Mr Vincent said.

He added that the outlook for the company was expected to remain stable, with consumer sentiment unlikely to weaken further and little challenge from online travel packages at this time.

Demand for flights would also continue as a result of a structured shift in flying, which has seen more Australians become used to taking to the air regularly, Mr Vincent said.

1:59pm: Shares in James Hardie remained soft, down 1.7 per cent at $9.38, in line with the softer overall market ahead of its December quarter earnings, which are to be released first thing tomorrow. It touched all-time highs late last month of $10.29 as the market's recent upswing hit its peaks.

Credit Suisse reckons the building products maker will lift the December quarter net profit 19 per cent to $US32.9 million against the backdrop of rising housing starts in the key US market.

Prices paid by consumers for telecommunications services fell by 2.2 per cent in real terms in 2011-12. Prices are now almost 20 per cent lower than they were in 2006-07.

“Notably, real prices for fixed-to-mobile calls fell by over 10 per cent in 2011-12. Significant falls in these prices over the last five years are likely to be due to increased competition and ACCC reductions in the regulated wholesale price for mobile call termination,” ACCC Chairman Rod Sims said.

The report on telecommunications prices notes that it has become common for service providers to maintain the nominal price of their mobile and internet plans at certain price points. ‘Price changes’ are then made by changing the inclusions of those plans.

“In 2011-12, total data download volumes grew by 51 per cent. Like other infrastructure such as roads, telecommunications networks can get congested at busy times. Service providers will either need to invest in more capacity, adjust pricing or encourage their customers to shift their usage to less busy times in order to manage growing demands into the future,” he said.

1:16pm: Here's something interesting from our small business team, in his Venture blog, Tony Featherstone looks at life planning the Roger Federer way. Are you over-committed on the mortgage? Do you have unrelenting pressure to perform at work? Have you forgotten how to have a conversation with your partner, beyond talking about work or the kids? You're not alone, and getting the basics right - just as Roger Federer does - can put you on the path to a successful and happy life.

1:03pm:Japanese government bond prices have risen, with the five-year yield hitting a record low, as Italy's deadlocked election outcome raised fears the euro zone debt crisis could resurface.

Mounting expectations of more drastic easing steps from the Bank of Japan to revive the ailing economy also helped push yields down to levels that some analysts said were "overly priced in" by the markets.

"It's very, very difficult to justify this yield level. But as the Federal Reserve has done something similar in the last few years, it's possible for the central bank to engineer lower rates for longer," said Shogo Fujita, chief Japan bond strategist at Bank of America Merrill Lynch.

"That's what is expected from the BOJ under this new regime under (Haruhiko) Kuroda-san or whoever it may be."

The five-year yield inched down 0.5 basis point to 0.115 per cent, breaking the previous low of 0.120 per cent hit on Monday after sources said Asian Development Bank President Kuroda, an advocate of aggressive monetary easing, was likely to be nominated as the next BOJ chief.

The 10-year yield slipped 2 basis points to 0.685 per cent, touching its lowest level since December 6, while 10-year JGB futures climbed 17 ticks to 144.84 after climbing to a two-month high of 144.95.

12:40pm: The incoming chief of Whitehaven Coal has sought to play down concerns he may be too close to the company's top shareholder and former suitor, struggling tycoon Nathan Tinkler.

Paul Flynn, who used to work for the Tinkler Group, is due to take over from Whitehaven managing director Tony Haggarty in March, a development investors have been lukewarm about, pushing shares down 6 per cent and below $3.00 when it was announced last week.

Flynn quit the Tinkler Group last September after becoming a director of Whitehaven.

12:31pm:More on Flight Centre, which is still trading about 2.7 per cent lower at the moment despite posting record first-half sales and profit results.

Looking ahead, the travel company says it would focus on growing its corporate sector and fully implementing its ‘‘blended model’’ - which would allow customers to seamlessly move between shopping for flights and travel packages online and in-store.

Managing director Graham Turner said in an investor briefing this morning that more of Flight Centre’s marketing would focus to on premium rather than low-cost flights.

"The overall move from economy to business, particularly in leisure, is going to be a positive move for us and the travel industry, as well as airlines generally," he said.

Mr Turner added that airline ticket prices were at an all-time low and were likely to rise.

"As well as people moving more into premium fares, I think that the fares will tend to move up. ... I think there will be some inflation of fares generally and I think that the move to more premium fares will help our [total transaction value] growth."

12:23pm: After two days of speculative news reports, QBE has confirmed it is planning to shed about 700 jobs from its global operations, as it looks to relocate more staff in the Philippines as part of a plan to save $250 million a year.

The insurer’s chief executive, John Neal, today said reports that 700 positions could be affected by cost-cutting were in the ‘‘ball-park,’’ but these cuts would come from across several divisions from around the world.

‘‘700’s in the ball-park for what we think we can achieve out of our major operations ... so that includes the US, that includes Europe,’’ Mr Neal told reporters.

It is not clear how many of these positions are held by Australian staff, and Mr Neal said the company was aiming for most of the changes to come from natural attrition and lower use of contractors. He said there would not be a mass redundancy round.

11:53am: The powerful tropical cyclone is on course for a "direct hit" on Australia's Port Hedland, which handles a fifth of the world's seaborne-traded iron ore, with evacuations starting on Tuesday ahead of forecast 280 kph winds and torrential rains.

Cyclone Rusty, which is expected to reach Australia's northwest coast on Wednesday, has already closed Port Hedland, halting the loading of millions of tonnes of iron ore, and shut offshore oil and gas fields.

Rusty could strengthen to a category four storm -- on a scale of one-to five -- by the time its reaches the port, according to the Bureau of Meteorology tracking system.

"In this case a direct hit looks likely," said Atlas Iron Managing Director Ken Brindle, adding the miner had halted its port operations and evacuated its employees from the area.

11:36am: The dollar has come full circle and at $US1.0280 is trading roughly where it was last night.

Overnight, it hit a high of $US1.0329 but fell as the Italian election results started coming in and scaring investors. A speech by RBA assistant governor Guy Debelle this morning in which he suggested the cash rate could be used to weaken the dollar, brought the currency as low as $US1.0249 before it recovered.

‘‘It’s surprisingly resilient, given the negativity we saw stemming from the Italian election result. We’re still pretty much stuck in the range we’ve been in for a while now.’’

Dragicevich says developments in Italy will continue to be a major driver on currency markets over the next few days. But, he says, traders will also be closely watching US Federal Reserve chairman Ben Bernanke’s testimony to Congress overnight.

‘‘We expect Bernanke to be quite dovish and to reiterate that the Fed is maintaining its easing policy,’’ he says. ‘‘So, that should see the Aussie dollar grind up a little bit from where it is.’’

11:17am: The sharemarket is fighting back despite continuing worries about the outcome of the Italian elections.

The ASX 200 has moved back above the 5000-point level but still down 0.8 per cent. Losses are across the board (apart from the gold sector).

CMC Markets chief market analyst Ric Spooner says the possibility of a political impasse in Italy for an incoming government is creating uncertainty amongst investors.

‘‘There is a significant political risk to the euro zone,’’ he says. ‘‘This election, in one of the biggest economies, which has one of the largest debts, is an indication that that mandate may not be forthcoming.

‘‘Over the medium term, that elevates the risks to the globe of some future problems.’’

11:13am: The national electricity industry regulator has strongly criticised plans by a NSW government-owned electricity company to upgrade the network in the state's north east, even following a decision to defer the upgrade.

The NSW high voltage transmission network owner Transgrid had planned to upgrade a link between Stroud and Lansdowne, near Taree on the mid-north coast, by building a 330,000 volt link to meet forecast demand growth.

Following criticism from affected households, Transgrid cut the planned upgrade to a 132,000 voltage link and deferred the proposed timing to the early part of next decade.

In a detailed criticism published earlier today, the Australian Energy Regulator, an arm of the consumer watchdog the Australian Consumer and Competition Commission, said Transgrid had failed to meet as many as seven necessary prerequisites when putting forward network upgrades, such as releasing the detailed reasons justifying the planned upgrade and detailing the likely constraints requiring the upgrade.

10:59am: Developer Becton Property Group has been pushed into limited receivership after failing to meet its $242 million debt obligations to US investment bank Goldman Sachs and vulture fund Fortress Investment Group.

The move against the 36-year-old residential developer and retirement village operator came when ‘‘extensive negotiations’’ broke down in the wake of Becton’s shares entering a trading halt on Friday.

Becton joint company secretary Jason Vanderzalm announced to the ASX that Goldman Sachs and Fortress refused to provide the debt waivers that were necessary to ensure the ‘‘future and ongoing solvency’’ of the group.

‘‘Having exhausted all alternatives available to it, the Board therefore has no reasonable basis for believing [Becton] will be in a position to pay its debts as and when they fall due,’’ the statement said.

KordaMentha have been appointed as receivers and managers for Becton Pty Ltd, Becton Group Holdings Pty Ltd and Becton Construction Group Nominees Pty Ltd.

10:53am: With wafer thin margins - the pre-tax margin fell to 4.8 per cent from 5.8 per cent - Transfield Services has outlined a range of planned asset sales of non‐core businesses such as Easternwell’s minerals exploration and marine geotechnical arms, most of the Middle East and Asian activities and its 20 per cent stake in Ratch‐Australia Corporation Limited.

Proceeds will be re-invested in the business, although neither the likely capital amount to be raised or the timing has been clarified at this stage.

Last week, the group outlined asset write-downs totalling $284.3 million, which largely confirmed earlier speculation it had overpaid when it originally bought the Easternwell unit.

Also weighing on investor sentiment towards its shares is the new stance that dividends will reflect earnings, signalling prospective volatility until the present restructuring is completed.

10:40am: The results of the Italian elections are pretty much in: the centre-left coalition will win a majority in the lower house of parliament but the upper house will be deadlocked, the Interior Ministry said after almost all votes were counted.

After 99.9 per cent of the polling booths had been tallied, the centre-left led the centre-right by about 125,000 votes in the lower house, handing it a sizeable majority thanks to a generous winner's bonus.

But the Senate was a different story. The centre left was sure to win more seats than the centre right in the upper house, but fell well short of a majority, even in coalition with outgoing Prime Minister Mario Monti's help.

Since both houses are needed to pass laws, the centre left would need the help of comic Beppe Grillo's 5-Star Movement or Silvio Berlusconi's centre right to pass laws, currently an unlikely prospect. If no agreement can be reached, a new vote would have to be called.

10:18am: Aussie investors aren’t the only ones in the region feeling jittery about Italy. Japan's Nikkei share average fell sharply at the open retreating from a 4.5 year high as the yen strengthened on uncertainty following the Italian elections, with shares of some big exporters to Europe tumbling.

The Nikkei dropped 2.4 percent to 11,379.92, and the broader Topix shed 1.9 per cent to 962.53.

10:09am: Anyone else subscribe to this line of thinking? Reader ‘DCJC’ writes:

Just waiting for the next European election - whenever that will be. Then the Spanish one, then the French one, then the Portuguese one, then the Irish one, then the German one, then the Icelandic one, then the next Greek one, then it will be time for the US one again. Sounds as if there will be 27 good opportunities to snap up some bargains over the next couple of years.

Looking forward to the Mongolian yak farmer stubbing his toe when out on the steppe next and seeing how that will affect the market.

9:46am: Behind the numbers in QBE’s 8 per cent increase in full year profit to US$716 million is a series of management changes as new chief executive John Neal moves to stamp his mark on the 126-year-old insurer.

Long serving chief financial officer Neal Drabsch has flagged his retirement in February 2014. Drabsch, has been CFO for the past 18 years - a period that took in Frank O’Halloran’s entire tenure as the former chief of QBE. Elsewhere QBE’s North American chief John Rumpler will exit the group.

The departure follows a 13 per cent drop in premiums over the past year. QBE’s headline result was hit by a high operating ratio - that is the ratio of claims, expenses to earned premium of 97.1 per cent, up from 96.8 per cent in 2011 given losses and provisions from Superstorm Sandy that hit the east coast of North America.

This is equivalent to QBE paying out 97.1 cents in claims for every dollar it receives in premiums.

9:33am: Now for the Whitehaven result. Lower coal prices and delays to operations have caused Whitehaven Coal to post a $47 million first half loss.

The NSW-focussed miner’s result in the six months to December 31 was down from a $19.9 million profit in the previous corresponding period.

‘‘Whitehaven’s first half performance has suffered from a number of adverse impacts on the business, the most significant being weak coal prices and a strong Australian dollar,’’ outgoing chief executive Tony Haggarty said in a statement.

The company was also hit by a train derailment and maintenance at its Sunnyside mine.

Rio reported debts of $US26.7 billion as of December 31 - up 24 per cent on the $US21.5 billion a year earlier - are higher than S&P expected.

Rio shares were off $1.53 or 2.3 per cent to $64.62 in early trade.

Ratings agency Standard & Poor's says Rio Tinto's debt is rising faster than expected and has downgraded the outlook to negative, while reaffirming its A-minus credit rating for the diversified miner. Unless Rio makes large asset sales or iron ore prices remain above $US120 a tonne, S&P warns, Rio's debt will continue to rise through 2013-14, risking a credit downgrade.Rio reported debts of $US26.7 billion as of December 31 - up 24 per cent on the $US21.5 billion a year earlier, higher than S&P expected. Rio shares were off $1.28 or 1.9 per cent to $24.87 in early trade on Tuesday. Ratings agency Standard & Poor's says Rio Tinto's debt is rising faster than expected and has downgraded the outlook to negative, while reaffirming its A-minus credit rating for the diversified miner. Unless Rio makes large asset sales or iron ore prices remain above $US120 a tonne, S&P warns, Rio's debt will continue to rise through 2013-14, risking a credit downgrade.Rio reported debts of $US26.7 billion as of December 31 - up 24 per cent on the $US21.5 billion a year earlier, higher than S&P expected. Rio shares were off $1.28 or 1.9 per cent to $24.87 in early trade on Tuesday.

9:15am: That sound was Aussie stocks hitting the floor. All sub indices on the ASX200 are lower except for health, which has gained 0.34 per cent in defiance of sentiment pretty much everywhere else on markets.

The rally in share markets in recent months has been mainly about investor preparedness to pay more for stocks given perceptions of a lower global risk environment. While it’s unlikely that the Italian election result will lead to any immediate change in economic policy, it will lead to uncertainty and reduced confidence.

Given the medium term nature of the risks from the Italian election and the possibility of positive news both from Mr Bernanke’s testimony and US budget negotiations still to come, investors may be cautious about selling too aggressively at this stage.

8:26am:Seven Group Holdings has flagged a rise of up to 20 per cent in full year profit despite being cautious about current trading conditions.

The media and industrials business has reported a net profit of 257 million dollars in the six months to December 31, up from 52 million in the previous corresponding period.

The surge in profit is largely a result of a 50 million dollar gain from the group’s stake in Consolidated Media Holdings to News Corp.

Seven says while it remains cautious about trading conditions in the second half, it still expects to lift full year earnings.

Seven said revenues and earnings from its core WesTrac business both rose strongly in the first half thanks to demand for heavy equipment from the coal and iron ore miners.

However, looking ahead to the second half, Seven said that while a rise in the iron ore price had increased activity from WesTrac’s iron ore customers, the coal sector was subdued and would have an impact on WesTrac’s second half earnings.

8:21am:A bit more here on Italy. Fears among investors centre on the resulting gridlock leading to new elections and throwing into doubt Italy's ability to pay down its debt.

"Europe hasn't gone away as an issue, it is going to hang around, and it is rearing its ugly head today," said Stephen Massocca, managing director of Wedbush Morgan in San Francisco.

"If someone gets elected who is simply not going to play by the rules, what are they going to do? It puts them in a real quandary here because their financial support, their monetary support is all stipulated by the fact that these austerity programs are going to be in place."

8:15am:Ramsay Health Care has reported a net profit of $138.4 million, a 10.1 per cent increase from the previous corresponding period, as it extended its chief executive Christopher Rex's contract for three years.

8:03am:Insurance giant QBE has reported a full-year profit of $761 million, up 8 per cent from last financial year.

It has also announced it would be rationalising the business to save $US250 million ($A243.75 million) each year from the end of 2015.

The company blamed the impact of severe droughts and superstorm Sandy in the US for profits being slightly lower than forecast.

Chief executive John Neal gave no detail on how savings would be achieved.

‘‘I will provide more detail of our new strategic direction, the progress of the operational transformation program and our targeted cost savings as we progress through 2013,’’ he said in a statement on Tuesday.

BusinessDay understands as many as 700 Australian jobs could be on the line as the company moves to reduce its global operating costs over three years. The AFR reports this morning that QBE could move as many as 3000 jobs to Manila, with Australian, US and European jobs to be consolidated there.

QBE had forecast a net profit of more than $US820 million ($A799.49 million).

8:01am:Flight Centre has reported a net profit of $91.8 million for the six months to December, a 13 per cent increase from the previous corresponding period, as the company set sales and profit records.

The travel company declared a fully-franked interim dividend of 46 cents per share.

The firm said its growth outlook for the 2012/13 financial year was marginally ahead of targets, and that it would continue to aim for profit before tax of $305 million to $315 million, with the largest profit months ahead.

"Australia and the UK are now entrenched as the company’s largest and second largest profit generators and again delivered record [earnings before interest, taxes, depreciation, and amortisation] in challenging trading conditions to underpin [Flight Centre's] overall growth," Flight Centre's managing director Graham Turner said.

"Our Singapore and Greater China businesses also contributed record first half EBIT, which helped [Flight Centre] comfortably surpass the profit milestone that was established last year.

"In addition, a first half sales record was established. While some leisure businesses grew strongly, including Australia's niche brands, corporate growth was generally stronger."

The company also recorded EBIT of $124.8 million for the first-half of the 2012/13 financial year, up 11 per cent from the same period the year before.

7:50am:Ausdrill has reported a net profit of $48.1 million in the six months to December, a 12 per cent fall from the previous reporting period, on the back of a slowdown in the mining sector.

The mining services group declared a fully franked interim dividend of 6.5 cents per share.

Ausdrill's managing director Ron Sayers said his company's strategic acquistions and business building had created a comprehensive service portfolio that helped it maintain operating profitability despite the slowdown.

"Out diversity and in particular the continued strong growth from Africa places Ausdrill in good stead as the mining sector resumes activity in 2013," Mr Sayers said.

Ausdrill also reported revenue of $580 million for the first-half of the financial year, a rise of 13.4 per cent from the same period the year before.

7:49am:The VIX, aka the volatility index for US stock options, rose the most in 18 months as partial election results in Italy and the lack of a political deal to avoid automatic spending cuts in the US sent stocks tumbling.

The Chicago Board Options Exchange Volatility Index climbed 34 per cent to 18.99 for the biggest advance since August 2011.

‘‘Volatility often behaves this way in front of events,’’ said Peter Cecchini, global head of institutional equity derivatives at New York-based Cantor Fitzgerald.

‘‘It’s as if people who have been sleeping at the wheel suddenly wake up to see the back of a tractor trailer way to close for comfort, and then they jam on the breaks.’’

7:46am:So, where is the local market headed today? CBA's chief currency strategist and head of international economics, Richard Grace, said the Australian stock market would take the lead from US stock market and open up weaker, as indicated by the SPI futures.

"This points towards market participants being somewhat concerned about the Italian elections," he said. "There is a definite sense of risk aversion going through the market."

But he said concern over Italy was largely "overblown".

"I don't think this will have a long-lasting effect on the market. Certainly by next week the risk aversion should subside."

7:40am: The Italian election has pushed US markets lower. In fact, Wall Street fell the most since September over fears that a divided parliament in Italy would get in the way of the country's reforms and hamper the euro zone's stability. US stocks had a shocker into the close. Then S&P500 lost 1.8 per cent, the Dow lost 1.5 per cent and the Nasdaq lost 1.4.

‘‘We don’t want to see more chaos out of Europe,’’ Bruce McCain, chief investment strategist at the private-banking unit of KeyCorp in Cleveland, said in a phone interview.

‘‘Any question about whether or not Italy would be committed to austerity measures after the elections gets investors concerned.’’

That’s seen the SPI tumble, pointing local stocks at a loss of more than one per cent at the open. The SPI was down 53 points to 4989.

7:32am: Investors in Europe and the US kept a close eye on the Italian elections overnight.

Reuters reports that a huge protest vote vote by Italians enraged by economic hardship and political corruption has pushed the country towards political deadlock, with voting projections showing no coalition strong enough to form a government.

With more than two thirds of the vote counted, the projections suggested the centre left could have a slim lead in the race for the lower house of parliament.

But no party or likely coalition appeared likely to be able to form a majority in the upper house or Senate, creating a deadlocked parliament - the opposite of the stable result that Italy desperately needs to tackle a deep recession, rising unemployment and a massive public debt.

So, to put it simply, uncertainty is the only certainty at this stage.

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Featured comment:

Just waiting for the next European election - whenever that will be. Then the Spanish one, then the French one, then the Portuguese one, then the Irish one, then the German one, then the Icelandic one, then the next Greek one, then it will be time for the US one again. Sounds as if there will be 27 good opportunities to snap up some bargains over the next couple of years.

Looking forward to the Mongolian yak farmer stubbing his toe when out on the steppe next and seeing how that will affect the market.

Commenter

DJCJ

Location

Melbourne

Date and time

February 26, 2013, 10:07AM

Sort comments by:

CMC markets is a good E-trade alternative $10 brokerage and free conditional trading.

Only phone trading on options though

Commenter

Young Trader

Location

Sydney

Date and time

February 26, 2013, 2:58PM

And when they go bust they take any money sitting in your account.

Commenter

Allan

Location

Prahran

Date and time

February 26, 2013, 3:17PM

Allan, as a CMC markets stockbroking customer I can assure you that we each have seperate Bank West cash accounts in our names...

It's CFD accounts (or margin lending accounts) not stockbroking cash accounts that you have to worry about in the unlikely event a broker / CFD provider co is liquidated.

Commenter

A Bodhi Nuisance

Location

Date and time

February 26, 2013, 3:41PM

Yes and CMC trade CFDs.

Commenter

Allan

Location

Prahran

Date and time

February 26, 2013, 3:52PM

On my numbers the industrials are trading at 15.5x 2013 earnings, for 8% eps gwth. Back out the banks and property and im at 17.5x for 9.5% gwth for non financial industrials. So i hope we get some nice earnings growth materialising in 2014....and the US doesnt fall off the cliff....and the Fed manages the stimulus program competently....and Europe recovers...and China delivers....and the coming election doesnt spook the market.....actually....ah... its getting a bit hot in here for me fellas, just excuse me while i dance a little closer to the door for a bit ......good luck all.

Commenter

dave

Location

sydney

Date and time

February 26, 2013, 2:43PM

Thank you for flying Bull Airlines.

We hope you have enjoyed flying at above 5000 for the time being.

Momentos of this auspicious occasion will be available for sale from the tuck shop and then later at the Canberra museum for Rare Occurences.

See you next time, c. 2019 when we will again enjoy the exemplary views of the tops of the Pollyanna's heads.

I predict that Allan will be taking a long holiday or a short course in going long.

Commenter

Snidery Mark

Location

Date and time

February 26, 2013, 2:36PM

Glass half full?

- continued trade deficits

- sequestration and more cuts when Congress gets some momentum

- unemployment edging higher

- Italy protest vote

50bps rate reduction looks good for next week.

Commenter

Opinion Only

Location

Melbourne

Date and time

February 26, 2013, 2:21PM

"Mr Hooke had considerable success improving the industry’s environmental and social performance as well as enhancing the sector’s relationship with indigenous Australians.

He also led the mining industry's fight against the Labor government's super-profits tax, which eventually cost Kevin Rudd his job as prime minister."

In case you are looking at E-Trade and are being-amazed at how solid the market is.... the quotes are not updating. Good bye E-Trade.....

Commenter

BML

Location

Sydney

Date and time

February 26, 2013, 1:31PM

"With the Chinese inventory draw down bottoming, plus its declaration that it will prevent rising house prices with obvious knock on effects for real estate development (which accounts for between 15% and 30% of steel consumption depending upon who you ask) the one-way bet on iron ore has suddenly reversed itself."

interesting contrast to the views of the Atlas CEO who states that demand is as strong now as it was when iron ore was at it's peak...

also the storm approaching port hedland should delay deliveries supporting the iron ore price in the short term...

I guess we focus on whatever supports our theories

Commenter

A Bodhi Nuisance

Location

Date and time

February 26, 2013, 2:37PM

The market is forward looking. Doesn't matter the demand today, it matters what new sources are coming on stream and predicted demand from China. Both negative for price.

Commenter

Allan

Location

Prahran

Date and time

February 26, 2013, 3:19PM

RIO down to $64.58 and now back up at $65.85.. Days like this I wish *I was a day trader.

Commenter

lima

Location

Date and time

February 26, 2013, 12:23PM

Don't, you'll do your head in...

Commenter

market faithful

Location

Perth

Date and time

February 26, 2013, 1:52PM

12:36pm - AUD surprisingly resilient...

Simple, overseas central banks are using tactics to influence it higher through the market. They are not simply holding some AUD in their reserves but trying to make us the highest cost nation.

Current government and RBA theme is to fast track the offshoring of jobs that were competitive before this treachery.

Commenter

Opinion Only

Location

Melbourne

Date and time

February 26, 2013, 12:07PM

When the Mongolian Yak herders start stubbing their toes - just look at it as an opportunity to get in on Mongolian footwear. Its not so much whether the market is raging or in a basket - its how you see an opportunty that seperates the players from the theorists.

Commenter

Ashley

Location

Canterbury

Date and time

February 26, 2013, 11:33AM

Close CBA 64.05 short again 65.50. Thanks for paying me back 95% of the dividend.

Commenter

Allan

Location

Prahran

Date and time

February 26, 2013, 11:32AM

I'm confused. If you closed out your short position early today, that must mean you thought the market was oversold and going higher.

You're not becoming one of us Polyannas now are you Allan? :-)

Commenter

Life Is Good

Location

The Real World

Date and time

February 26, 2013, 12:59PM

Not at all. I just know that Pollyannas are buying the dips. Hope that clears things up for you.

Commenter

Allan

Location

Prahran

Date and time

February 26, 2013, 1:36PM

Guys where are the gains coming from?

Are the stocks that are gaining, those with low liquidity?

Only BPT in my list of active stocks has gained anything.

CBA crawled back but only on mild volume.

Commenter

Woods

Location

Date and time

February 26, 2013, 11:27AM

"Becton Property Group’s corporate entities have been put into receivership by the beleaguered company’s lending consortium, led by Goldman Sachs."

Oh yeah... property is in great shape.

Commenter

Allan

Location

Prahran

Date and time

February 26, 2013, 11:20AM

has been sad watching the decline of our construction industry... Becton one of many that took on more debt than it can now service...

I wonder if there are others in the same position... Also interesting to ponder, is GS intentionally trying to depress property prices for some reason by pushing Becton into administration (and presumably liquidation)...

Commenter

A Bodhi Nuisance

Location

Date and time

February 26, 2013, 12:20PM

The story behind Becton is Goldmans buying up the debt and then pushing the parent into receivership as a tactic to leverage themselves into an equity position. The receivership does not involve the company's operations, and is solely about a tussle over the equity, which Goldmans see as valuable.

The comment "oh yeah, property is in great shape" is up there with the most ignorant comments ever posted here.

Commenter

Balanced

Location

Date and time

February 26, 2013, 2:44PM

They went bust. If you think that's positive maybe you should check your dictionary for the correct meaning of ignorant.

Commenter

Allan

Location

Prahran

Date and time

February 26, 2013, 3:34PM

"The crisis in the New South Wales construction industry continues with yet another bankruptcy last week.

The latest victim is Southern Cross Construction, a commercial builder with 39 staff members and four projects underway, including a Bunnings Warehouse and Woolworths at Balgowlah in Sydney’s North.

The latest collapse comes amid a New South Wales government inquiry into insolvencies in the sector which follows what New South Wales finance minister Greg Pearce refers to as the collapse of ‘hundreds’ of builders over the past three years which left more than 24,000 unsecured creditors shortchanged on money owed to them."

http://designbuildsource.com.au/nsw-builder-bankrupt

I suppose Goldmans engineered the failue of the hundreds of other construction companies? You're so quick to pull out a superlative you don't think through what you're posting. Grow up.

Commenter

Allan

Location

Prahran

Date and time

February 26, 2013, 3:41PM

Thanks Balanced... interesting back story...

Cheers

Nuisance

Commenter

A Bodhi Nuisance

Location

Date and time

February 26, 2013, 3:45PM

Oh and Becton can't use the excuse that credit markets are frozen. No other lender is stepping in because the whole world knows property in Australia is a huge bubble. That's the real "back story".

Commenter

Allan

Location

Prahran

Date and time

February 26, 2013, 3:55PM

I really want to say ' what were they Italians thinking!" but then I think of who has been governing Australia these last 7 years and all I can say is there's dumb people everywhere! sheesh

Commenter

why!!!!!

Location

Date and time

February 26, 2013, 11:02AM

Hopefully Beppe Abbott will get in and those asset bubbles will start inflating again.

Commenter

exasperation!!!!!

Location

Date and time

February 26, 2013, 12:12PM

Can buy at 1 % off for short time only..lol

Commenter

Magoo

Location

Date and time

February 26, 2013, 11:02AM

"Europe's 3rd-largest economy, with 3rd-largest debt-to-GDP globally, with an anti-euro, anti-austerity Senate, not a concern so it seems"

Pollyanas have their fingers in their ears. They caaan't heeeaaare yooouuuu.

Commenter

Allan

Location

Prahran

Date and time

February 26, 2013, 10:54AM

Europe being a basket case has been a known factor for quite a while now.

Commenter

tpcam

Location

Date and time

February 26, 2013, 12:14PM

Market up circa 20% since christmas.

Looks like Alans pollyanas were correct.

'PollyAlan!?'

Commenter

Up n happy

Location

Date and time

February 26, 2013, 2:10PM

Nope. Not even 10%. Doh!

Commenter

Allan

Location

Prahran

Date and time

February 26, 2013, 3:01PM

"Whitehaven Coal reported a first-half loss on Tuesday, whacked by weak coal prices and a strong Australian dollar, but said it is on track to start construction of its key growth project in mid-2013."

They're going to have to compete with cheap coal coming from the US. Indonesia, not to mention Mongolia's vast reserves of high quality coal.

Personally I'd like to see a carbon tax slapped on coal exports to make sure these new mines don't get off the ground.

Commenter

Allan

Location

Prahran

Date and time

February 26, 2013, 10:27AM

Correct Allan. Wouldn't mind 1.46 profit in 2 weeks minus interest.to market faithful - i am about to retire...plus I am a trader not investor who must be able to transform from bull to bear and vice versa...right now, I am happy to be in the bear camp.

Commenter

Allan2

Location

Date and time

February 26, 2013, 10:14AM

True, but if you had "bought the dips" you could have bought CBA near the close of Thursday's pullback @25 and sold the next day @26.6, a profit of $1.60. I'm not saying your strategy is wrong - you made money - but there is an awful lot of money wanting to buy the dips.

Commenter

Life Is Good

Location

The Real World

Date and time

February 26, 2013, 10:41AM

Yep the eurozone, UK, US, Australia have plenty of spare cash. No wait...

Commenter

Allan

Location

Prahran

Date and time

February 26, 2013, 10:51AM

Isn't retirement just a state of mind these days? The amount of capital required to "retire" seems to be getting higher and higher with each passing day. I think I will probably need about 2mill by the time I retire! Good luck, we all have the same end game be we traders or investors. Remember, whoever dies with the most money wins!

Commenter

market faithful

Location

Perth

Date and time

February 26, 2013, 11:18AM

Nop Pollyannas overbuying causes wild swings in the market when they are caught with their pants down.

Commenter

Allan

Location

Prahran

Date and time

February 26, 2013, 12:41PM

If you are in need of fresh cash Allan a visit to the high quality printing presses of the comancheros springs to mind.

Commenter

Opinion Only

Location

Melbourne

Date and time

February 26, 2013, 1:23PM

Just waiting for the next European election - whenever that will be. Then the Spanish one, then the French one, then the Portuguese one, then the Irish one, then the German one, then the Icelandic one, then the next Greek one, then it will be time for the US one again. Sounds as if there will be 27 good opportunities to snap up some bargains over the next couple of years.

Looking forward to the Mongolian yak farmer stubbing his toe when out on the steppe next and seeing how that will affect the market.

Commenter

DJCJ

Location

Melbourne

Date and time

February 26, 2013, 10:07AM

depends whether the shorters figure they can gouge money from the long term investors. They have made a tidy sum today. It is no longer a market to promote healthy investment

Commenter

colin

Location

melbourne

Date and time

February 26, 2013, 10:49AM

If the yak farmer has a high debt to GDP ratio, then it will probably have a big impact. Flippancy won't change that.

Commenter

cranberry

Location

Date and time

February 26, 2013, 10:55AM

A build up of short positions on market aids in price discovery. Your problem if you ignore it.

Commenter

Allan

Location

Prahran

Date and time

February 26, 2013, 11:06AM

yes, the market is a cruel master, irrational, brutal, but some days your best friend.

Commenter

market faithful

Location

Perth

Date and time

February 26, 2013, 11:20AM

Until those within the EU and Euro quickly choose one path and are unified in their goal i.e. full political and fiscal union with good governance and prevent measures to interfere with that process it will be a soap opera.

Commenter

Opinion Only

Location

Melbourne

Date and time

February 26, 2013, 11:56AM

A build up of short positions aids in wild swings in market prices as it depresses buying volumes allowing larger than average falls on light volumes... not sure about the price discovery theory though...

Commenter

A Bodhi Nuisance

Location

Date and time

February 26, 2013, 12:13PM

Interesting day today. After hitting medium term resistance at 5100, the market has pulled back. Still only 100 down though, although the volatility is high. May be a good sign if we close above last Wednesday's close of 4990.3 though.

Commenter

Life Is Good

Location

The Real World

Date and time

February 26, 2013, 9:54AM

Couldn't agree more @Life is good. Once the market has the traded through the resistance level there is no reason why it will not be full steam ahead to 5200 and beyond. Any close above 5000 today will be good news.The news will only get better on September 14.

Commenter

Glass half full

Location

Date and time

February 26, 2013, 12:07PM

Marius Kloppers says "I think over the next five years, we as Australians and at BHP Billiton are going to see very strong demand from China but we are going to go from growth rate in minerals demand of 15 to 20 per cent a year to two to four per cent a year"

‘‘That means the suppliers will be able to respond and meet demand and therefore you have to be low cost and you have to take into account that price is not going to help you here.’’

How many years does the iron ore price have to stay at inflated levels for FMG to pay back their massive loans?

Commenter

Allan

Location

Prahran

Date and time

February 26, 2013, 9:38AM

take profit for shorting CBA.15/02 - $67.7026/02 - $64.70$3 profit.Almost got the dividend free in 2 weeks, no need to wait till April to get the dividend - interest, freeing up money used on physical shares for other opportunities or put it in a term deposit at 4.55%.This trick does work...Allan, hope you don't mind I call myself Allan2. :).

Commenter

Allan2 (formerly good day for the shorts)

Location

Date and time

February 26, 2013, 9:37AM

$3 less the dividend of $1.64. If you're short you have to pay the dividend.

Commenter

Allan

Location

Prahran

Date and time

February 26, 2013, 9:48AM

oh puleeezz, when you grow up you wanna be just like Allan?

Commenter

market faithful

Location

Perth

Date and time

February 26, 2013, 9:58AM

As you can see further down, i am in very heavily But stuck with long positions as I do not understand shorting, no matter how much material I readIf anyone can talk me through this on private mail would be appreciated. hearnyacht@gmail.com

Commenter

stuarth44

Location

buderim

Date and time

February 26, 2013, 10:28AM

is it another 2% dive and 1.5% up next day ?

Commenter

superant

Location

Date and time

February 26, 2013, 9:25AM

waiting fot stocks to dive..time for pick,pick

Commenter

superant

Location

Date and time

February 26, 2013, 9:02AM

Tried several languages in Google translate on your comment. None of them worked.

Commenter

grasshopper

Location

Date and time

February 26, 2013, 9:17AM

always good money to be made cba, happens every timeHave 13000wbc sell for 13.20

Commenter

stuarth44

Location

buderim

Date and time

February 26, 2013, 9:25AM

Regardless of circumstances, QBE have again disappointed the market. And as always, they promise a better year ahead. Some skeletons in the closet methinks. A 10c dividend is a poor offering for the faithful.

Commenter

BML

Location

Sydney

Date and time

February 26, 2013, 8:51AM

I'd hate to see what happens when the local council elections in Lichtenstein are on a knifes-edge.

Good to see Allan at his usual positive best. What a privilege it must be to live in his world and share his exuberance and positiveness.

Commenter

DJCJ

Location

Melbourne

Date and time

February 26, 2013, 8:36AM

No need to concern yourself with me worry about your own trading. Thanks for being a fan and reading all my comments though champ.

Commenter

Allan

Location

Prahran

Date and time

February 26, 2013, 9:06AM

Oh and if you don't see the significance of the Italian elections and the global concerns of a further blowout in Italy's public debt leading to total default then perhaps you should do some research.

Commenter

Allan

Location

Prahran

Date and time

February 26, 2013, 9:13AM

Relax Allan, they'll just print up some more Euro's to devalue against the USD, or the Italians will ask for bailouts from the ESM/ECB, or OMT the Italian bonds.

Got gold?

Commenter

Bye Bye Fiat Money

Location

Date and time

February 26, 2013, 10:29AM

I'm always relaxed. Nope no gold exited GOLD ETFS early 2012.

Commenter

Allan

Location

Prahran

Date and time

February 26, 2013, 11:13AM

QBE results look to have weathered the storms OK.

Commenter

ekka

Location

Date and time

February 26, 2013, 8:00AM

QBE results are for the year ended 31 December 2012.Have you accounted for the newer Queensland floods?i.e. Australia Day onwards.

Commenter

Woods

Location

Date and time

February 26, 2013, 8:46AM

Dive! Dive! Dive!

Commenter

Allan

Location

Prahran

Date and time

February 26, 2013, 7:53AM

As in 'rig for deep submergence' ?

Commenter

Opinion Only

Location

Melbourne

Date and time

February 26, 2013, 8:37AM

... I'm going to close my long positions. It's only a small parcel so I doubt it will affect the market.

Either way, I wasn't expecting Berlusconi's strong performance.

Italy has become sick of austerity. Look at their great businesses such as Ferrari, Lamborghini, premium cheeses and more.

I believe the pro-austerity foreigners are the holders of Italian sovereign risk.

Has anyone actually completed research on who is holding Italian bonds because some Italians are stating that it was better under Berlusconi, on the latest foreign correspondent?

Anyway, I'm off to watch the markets again.

Commenter

Woods

Location

Date and time

February 26, 2013, 8:54AM

Shut up!

Commenter

Gordon Gekko

Location

Date and time

February 26, 2013, 9:17AM

"The Italian election has pushed US markets lower..."

You couldn't be further from the truth...there is no cause and effect with the share market, otherwise we would be in a perpetual bull or bear market. Earnings have no effect either.

Commenter

Les

Location

Date and time

February 26, 2013, 7:52AM

It's human behaviour, but you won't see a headline stating that because that would be rubbing it in our faces.